How Mega-Funds Turned Venture Capital Into 'Cancer Capital'

Anil Dash, a former startup CEO and board member who has raised tens of millions in venture funding, argues that the industry no longer resembles the check-writing model most people picture. VC was meant to be a small, high-risk slice of the broader capital market. Instead, a tiny cohort of firms has grown into ‘do everything’ funds managing tens of billions, blending private equity with traditional venture investing. At that scale, a 2% management fee guarantees roughly a billion dollars a year regardless of whether any portfolio company survives, insulating the largest firms from the very risk that once defined the business.

The deeper shift is structural: because these giants no longer legally qualify as venture capital firms, they escape the constraints that bound traditional VCs. They can buy shares directly from founders, hold unlimited public stock, sell stakes between their own funds while booking paper gains, and let portfolio companies buy them out — all without a company ever turning a profit. As IPOs have declined, these mechanisms let insiders cash out early while retail and pension money increasingly absorbs the downside. Meanwhile the power balance has inverted: rather than founders pitching companies, firms now publish political manifestos and recruit founders to execute them, while regulators, media, and newcomers still treat VC as the job-creating engine it was two decades ago.

Dash points to Andreessen Horowitz as the clearest example, citing its $115.3 million in midterm political spending — nearly double its 2024 total and more than any individual billionaire donor, including Elon Musk — and Molly White’s tracking showing a16z alone accounts for over 20% of political contributions from the crypto and AI companies it monitors. He notes former partner John O’Farrell’s rare public criticism of the firm’s ‘political infiltration’ of AI policy, and the firm’s decision to hire a partner with no tech background whose notoriety came from killing an unarmed man on the subway. His conclusion: what used to fund innovation has become a largely unaccountable political machine, and it should be treated as one.